Corruption lingers 20 years after legislative scandal erupts

By ERIC FREEDMAN
Capital News Service
LANSING – It was 20 years ago this month that a front-page newspaper article began to unravel an extensive legislative corruption scandal that led to felony convictions for 10 people, including a lawmaker from the Upper Peninsula.
That Jan. 15, 1993, Detroit News article and dozens that followed also helped push one of the state’s most powerful politicians onto the Capitol sidelines, uncovered political influence in the awarding of state contracts and triggered tougher oversight of the House Fiscal Agency (HFA), the nonpartisan office that analyzes tax and budget issues for the House of Representatives.
And for the first time in 14 years, the Auditor General’s office examined the HFA’s books, discovering that at least $1.8 million in public money had been stolen, misspent or simply couldn’t be accounted for.

That first article about suspicious financial dealings at the HFA, “State fiscal watchdog under fire,” by reporter Jim Mitzelfeld was like a domino standing on end that, when tipped over, knocks down all dominos lined up behind it.
It sparked a joint federal-state criminal investigation that generated charges against HFA director John Morberg, then-Rep. Stephen Shepich, D-Iron River, and eight other legislative employees and consultants.
Democratic state Attorney Gen. Frank J. Kelley and Republican U.S. Atty. John Smietanka created a task force to investigate the conspiracy, bringing together the State Police, FBI, Internal Revenue Service and other law enforcement agencies.
Morberg, the ringleader, went to prison for racketeering, conspiracy and tax crimes. Shepich was convicted of receiving fraudulent travel reimbursement while working on the agency staff, and he resigned his Western U.P. House seat as part of a plea bargain.
HFA deputy director Warren Gregory was convicted of federal tax crimes and imprisoned. He died Jan. 9, a week short of the 20th anniversary of that first newspaper article.
Morberg’s mentor was Rep. Dominic Jacobetti, D- Negaunee, a veteran legislator who chaired the House Appropriations Committee. His committee was responsible for monitoring the HFA but failed to do so.
Jacobetti, nicknamed the “Godfather,” wasn’t criminally charged but was forced to resign his powerful committee post.
In the two decades since the HFA scandal erupted, a number of state legislators have found themselves in legal hot water, during or after their time in the Capitol.
Bill Ballenger, editor of the Inside Michigan Politics newsletter, said, “You could argue that things are marginally better, but I don’t think it necessarily means a “sterling standard of excellence and political ethical perfection.
Ballenger, a former GOP representative and senator from Ovid, said mechanisms exist to deal with members who commit “malfeasance, misfeasance” or are “bad characters,” even if they aren’t convicted of serious crimes.
For example, he noted that in 2001 the Senate expelled Macomb County Republican David Jaye, who had a drunken driving record and had been accused of, but not charged with, assaulting his fiancée.
And this year, the House seated newly elected Rep. Brian Banks despite the Detroit Democrat’s past felony convictions for writing bad checks.
Currently, the most prominent ex-legislator in criminal trouble is former Rep. Kwame Kilpatrick, D-Detroit. He is now on trial on federal charges stemming from his corruption-pervaded tenure as mayor of Detroit.
In 2003, former Rep. Keith Stallworth, D-Detroit, pleaded guilty to a federal money laundering charge and agreed to cooperate with authorities in a drug investigation. He was on the Wayne County Commission at the time.
The latest legislator to come under scrutiny is Rep. Alberta Tinsley-Talabi, D-Detroit, for allegedly accepting travel and cash from an out-of-state business executive while serving on the Detroit City Council. She has not been charged with a crime.
On the opposite side of the aisle, House Speaker Jase Bolger, R-Marshall, and ex-Rep. Roy Schmidt, R-Grand Rapids, were investigated last year for possible criminal violations in a scheme to find a “straw” candidate to run against Schmidt when he switched from the Democratic to the Republican party.
Neither has been charged, but a one-judge grand jury probe is underway. Bolger won reelecting in November but Schmidt lost his seat.
Also in 2012, former state Sen. Thad McCotter, R-Livonia, quit his Oakland County congressional seat amid scandal after several staff members submitted bogus election documents. McCotter was not charged.
And last year, Rep. Bob Genetski, R-Saugatuck, was convicted of drunken driving but won reelection in November.
Ballenger noted that the Legislature, unlike Congress, has no official ethics committees, adding, “but how good is their track record?”
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CNS director Eric Freedman and Detroit News colleague Jim Mitzelfeld won a Pulitzer Prize for their coverage of the scandal.